IT and Business Insights for SMB Solution Providers

Zix Buys Cloud Distributor AppRiver

The $275 million deal positions the combined company to pair a wide array of email security products with a robust Office 365 licensing business. By Rich Freeman

Email security vendor Zix Corp. has acquired cloud software distributor and service provider AppRiver LLC in a transaction valued at $275 million in cash.

The deal positions Zix, which is headquartered in Dallas, to expand beyond its base in threat protection, encryption, and archiving solutions into other email-related and cloud-based markets, according to CEO David Wagner.

“Over the past two years, Zix has been successfully executing on its strategy of becoming a leading provider of email security for compliance,” Wagner said today in prepared remarks. “This acquisition builds on those efforts in a monumental way: we’re combining two email security companies that can drive great synergies and higher growth together by leveraging Zix’s superior product delivery and AppRiver’s exceptional customer service and support.

“More specifically, the acquisition helps us expand our customer base, enhance our advanced threat protection position, and accelerate our high-velocity go-to-market strategy through AppRiver’s numerous and longstanding channel partnerships. Most importantly it further accelerates our offerings into the cloud at the point of initial cloud application purchase.”

Based in Gulf Breeze, Fla., AppRiver serves over 60,000 customers worldwide through some 4,500 MSPs. In addition to email security products like Zix’s, the AppRiver product catalog includes email continuity services, web protection software, and cloud migration services. The company is also one of the relatively few indirect providers (formerly known as two-tier distributors) in Microsoft’s Cloud Solution Provider program authorized to sell Office 365, Microsoft 365, and other web-based Microsoft offerings to resellers and handle customer invoicing on their behalf.

“Email is typically the first application that gets moved to the cloud, and this acquisition puts us squarely at the beginning of our customers’ cloud migration. We look forward to capturing more mailboxes and additional services for years to come,” said Wagner in his press statement. “From a cross-selling standpoint, the acquisition provides attractive and abundant synergies at the onset, including the opportunity to drive stronger attach rates by attaching Zix’s solutions to AppRiver’s customer base, while also leveraging the lead generation potential of AppRiver’s Microsoft Office 365 suite to attach additional products to Zix’s installed base of customers."

Zix expects its annual recurring revenue (ARR) to reach approximately $180 million in the first year after the AppRiver transaction closes, and projects an 11 to 15 percent uptick in ARR during its 2019 fiscal year to between $200 and $207 million.

AppRiver expanded its footprint in Canada last March through its acquisition of Roaring Penguin Software Inc., an Ottawa-based provider of spam filtering, archiving, and secure messaging solutions.

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